A simple fix for Md.'s complex tax problem

Governor of Maryland Larry Hogan talks about a bill that he is introducing for Maryland tax payers in response to the new federal tax plan. (Kim Hairston, Baltimore Sun video)

Governor of Maryland Larry Hogan talks about a bill that he is introducing for Maryland tax payers in response to the new federal tax plan. (Kim Hairston, Baltimore Sun video)

The Baltimore Sun published a very informative editorial about the complications that Maryland taxpayers will face when the file their tax returns for 2018 (“Thanks to Trump and the GOP, Marylanders will have to do their taxes four times,” Jan. 26). Yes, Gov. Larry Hogan's proposal to allow itemized deductions on Maryland tax returns sounds good, but you have identified the problems with actually accomplishing it. It also needlessly complicates the Maryland tax code.

In fact, you don't know how bad it really will be for some Maryland taxpayers. The real hit is $1 billion in increased state and local income taxes to the taxpayers who previously claimed itemized deductions and had Maryland adjusted gross income of $150,000 or less. You don't have to take my word for it. I used the data in the 2014 Personal Statistics of Income reported by the Comptroller’s Office. Some 998,603 returns from these taxpayers claimed deductions valued at $15.9 billion. Take into account that these taxpayers will be claiming standard deductions valued near $3 billion for 2018 and you get a net increase in Maryland taxable income amounting to $12,852 million. Multiply by 7.75 percent and you get an increase in state and local taxes of $996 million, close enough to $1 billion for most purposes.

I have suggested a simple way to fix this problem: Increase the Maryland standard deduction to $8,000 for single filers and $16,000 for joint filers. These changes would return about $900 million to Maryland taxpayers. Senator Andrew A. Serafini, a Republican from Washington County, has proposed increases to $7,500 for single filers and $10,000 for joint filers in Senate Bill 318. His changes would return about $643 million to Maryland taxpayers. Please note how simple this change would be for most Maryland taxpayers.